Munjal Auto Industries Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Low Profitability.

Munjal Auto Industries, a smallcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 18, 2024. This decision was based on weak long-term fundamental strength, with a -6.79% CAGR growth in operating profits over the last 5 years. Additionally, the company has a low profitability per unit of shareholders' funds, with a return on equity of only 5.25%.
In the recent quarter, the company's results were flat, with the DPR(Y) at its lowest at 0.00% and the INTEREST(Q) at its highest at Rs 7.63 crore. Furthermore, the non-operating income for the quarter was 59.07% of the profit before tax (PBT).

Despite being a smallcap company, domestic mutual funds hold only 0.08% of the company, which could indicate that they are not comfortable with the price or the business. This is significant as domestic mutual funds have the capability to conduct in-depth on-the-ground research on companies.

On the technical side, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW being bullish. Additionally, the company has an attractive valuation with a ROCE of 11.3 and an enterprise value to capital employed ratio of 2.1. The stock is also trading at a discount compared to its average historical valuations.

In the past year, the stock has generated a return of 65.66%, while its profits have risen by 188.4%. This has resulted in a PEG ratio of 0.1 for the company, indicating a market-beating performance in both the long-term and near-term. Furthermore, Munjal Auto Industries has outperformed the BSE 500 in the last 3 years, 1 year, and 3 months.

Overall, with weak long-term fundamentals and a low profitability per unit of shareholders' funds, MarketsMOJO has downgraded Munjal Auto Industries to a 'Sell'. However, the stock is currently in a mildly bullish range and has an attractive valuation, making it a stock to watch closely in the future.